By Yaw Tawia
The Ghanaian Times of Tuesday, June 24, 2014 (page 4) carried a report bearing the title “GUTA strikes today”! GUTA is the Ghana Union Traders Association. Its members are traders who deal almost entirely in imported merchandise. This Association has been one of the most vociferous private business associations in Ghana since the return to constitutional rule in 1992. Reading that headline was thus both interesting and alarming. Consequently, one was drawn, inexorably, to pay some attention to the report. The report discloses both interesting and rather worrying information.
The report opens with the declaration that GUTA “…has protested against the influx of foreigners in the retail trade.” Apparently, GUTA has protested in this manner because, being in the retail trade themselves, they feel threatened by the influx of foreigners into the trade. But what is wrong with having foreigners participate in the retail trade of the country? Does this not increase and grow the economy? Would it not increase competition thereby assuming the consumer of a better and fairer buying situation? Is this a reason for GUTA to strike? This policy of keeping foreigners out of our retail trade needs to be revisited. It does not sit well with the global environment in which we are obliged to operate as a country. It is difficult to implement, and enforcement will only result in giving the enforcer a bad name all round.
The report proceeds to state that GUTA attributed the rapid depreciation of the cedi to the country’s inability to retain its hard earned foreign exchange, by allowing the repatriation of huge sums of money by foreigners in retail trading meant for Ghanaians. This is very interesting. The members of GUTA are steeped in importation of goods for sale. Thus even without foreigners, they will have to themselves an open book to spend all our hard earned foreign exchange. None of them does anything directed at earning any foreign exchange at all. They are the ones responsible for the depreciation of the cedi. The suggestion that foreigners are responsible is sheer nonsense, a red herring designed to make the GUTA look good, when in fact they are the very source of the problem they complain of. Is it the case of GUTA that, if somehow foreigners should suddenly disappear from the retail scene, the cedi will suddenly appreciate? Obviously not! Because the reasons for the depreciation of the cedi go beyond the mere fact that foreigners are participating in the retail sector of our economy.
The sheer naivety exhibited by GUTA and many seemingly knowledgeable people in this country about the depreciation of the cedi is sometimes eye-watering. It must be understood that the value of the cedi vis-à-vis other currencies is mostly the outcome of supply and demand relationships. Thus, in simple terms, anytime the demand goes up without a corresponding increase in supply, then the price should be expected to increase. The reverse is also true. So, if we have a situation where an important trade association such as GUTA apply all their skills to the importation of merchandise for sale without given any thought to diverting some of their energies to exports, only to turn round to find scapegoats in the government and foreigners, is sad. Worse still is when a group of politicians in government, contrive to hoodwink the whole country into thinking that they could defy the laws of gravity and somehow make the cedi equivalent to the dollar in value is just mind boggling. In fact it is nothing short of a gargantuan fraud on the good people of the country. Sadly, GUTA has fallen so badly into this trap that they now think this make believe world is the real world. Alice in Wonderland indeed!
This is why it is odd, very odd, for GUTA to direct “…all traders within the Accra and Kumasi metropolis to close all shops from today to Friday, June 27 in protest against the influx of these foreigners..” What will this achieve beyond the nuisance value? After all, it is not all retailers who are members of the GUTA. What will happen if they go ahead to open their shops? By the way, is this association real? Is it legitimate? What is its incorporation status? Who are its members? What is its governance structure and arrangements? How do its leaders gain office and what is the tenure of office? Do their members pay any fees or subscriptions? Are there any audited reports? We have to be curious about the bona fides of organizations and people who claim to be speaking for us or for large groups, shouldn’t we?
The report states that one Mr. Kweku Ofori described as the president of GUTA, stated that in addition to the influx of foreigners into the retail business and the depreciation of the cedi, their other reasons for going on strike are “…the special levy on imports and the 2.5 percent VAT increase, dollar indexing of duty and illegal charges at the port,” which have all contributed to financial challenges in the country.
As observed earlier, one of the direct reasons why the cedi is depreciating is because of the high and inordinate demand for imports. If this could be reduced or reversed, then there is every likely hood that the cedi will recover. Thus, any measures that could discourage imports, for example by making it more expensive or difficult, should be welcomed by those who complain about the depreciation of the cedi.
If the special levy on imports can be perceived as a measure designed to create a disincentive for imports, then all of us, as well as GUTA; ought to be praising this measure, not protesting against it.
As for the 2.5 percent VAT increase, it is blatantly disingenious for GUTA to be the one complaining. If there should be complaints, it is the consumers who are entitled to do so. For after all, VAT is a consumption tax. All of us, consumers, will pay this tax. So why is GUTA arrogating giving the impression that its members are the ones being penalized by a selective tax measure?
GUTA complains about “dollar indexing of duty”. But how else is the duty to be determined? Duty is usually charged as a percentage of the value of the product going through customs. The value of these imported goods, are stated (invoiced) in dollars. It obviously stands to reason, then, that the rates should be dollar indexed even though the actual amounts payable would be in cedis.
GUTA complains about “illegal charges at the port.” Now, this is interesting. For, if indeed there are illegal charges at the port, then no one, including GUTA members, should pay such charges. Indeed, they should obtain court orders to curtail the application of such charges. As an association capable of mounting a four day strike action, instituting legal proceedings to protect their members from the payment of illegal charges should not be beyond them. Ordering its members to close their shops for four days can hardly be said to be an appropriate response to a requirement for payment of illegal charges.
In light of the foregoing, the protestations of the GUTA spokespersons put out in the report to the effect that their action has no political links smack of extreme insincerity. Who can believe this? Is this not the same GUTA which declared discounts in the prices of their goods when the NDC lost the elections and was replaced by the NPP in 2000? For the entire period that the NPP was in power, did we ever hear GUTA raise a protest about any official policy? The restriction against the participation of foreigners in retail trade was in the law before the NPP came to power. Yet GUTA never raised the matter during the NPP years in government; why? When seemingly non-political organizations and persons choose to speak and act in this way, they do themselves a dies-service because it diminishes their credibility and integrity in the public eye.
Once upon a time, a sitting government, in an effort to increase tax revenue, introduced a new tax called VAT. The political opposition organized huge demonstrations against the introduction of the VAT. The demonstrations turned tragically violent. Subsequently, the political opposition worn elections, and assumed power. They did not repeal the VAT law. Rather, surprisingly, they increased the rate of the tax. GUTA members may have participated in the anti-VAT demonstrations, but without doubt, GUTA never protested when the new political overlords increased the tax. GUTA should be told in clear and uncertain terms that we have seen it all before. We e know where their sympathies lie. Their protestations at this time therefore do not cut ice with us.